[Conference Call] Samsung: "Rising Memory Prices Increase Smartphone Costs...Focusing on Flagship Models" (Comprehensive)

"Securing Supply Stability with Partners... Minimizing Profit Decline"
"Galaxy S26 Equipped with Next-Generation AI and Second-Generation AP... Innovating User Experience"
60 Million Smartphones Shipped in Q4

Samsung Electronics is taking steps to minimize profit decline resulting from the rising cost of memory components for its Galaxy smartphones. This move comes in response to a significant increase in memory semiconductor prices driven by growing demand for artificial intelligence (AI).

Cho Sunghyuk, Executive Vice President and Head of Strategic Marketing at Samsung Electronics’ MX Division, stated during the fourth quarter 2025 earnings conference call held on January 29, "The burden of key component unit costs is increasing across the industry," confirming the company's position.

On the 15th, a customer visiting the KT Plaza Gwanghwamun Central Branch in Jongno-gu, Seoul, is experiencing Samsung Electronics' Galaxy Z Fold7. KT announced that from the 15th to the 21st, pre-orders for the Galaxy Z Fold7 and Galaxy Z Flip7 will be available at all KT stores nationwide and on KT.com. July 15, 2025. Photo by Kang Jinhyung

He explained, "As demand for memory in AI servers has expanded, shortages and sharp price increases for memory used in mobile products have become a reality since the fourth quarter of last year. Although we expect a challenging business environment this year, this is an industry-wide issue, and competitors are facing the same conditions."

He also expressed the company's intent to minimize risks arising from memory semiconductor price hikes. Executive Vice President Cho said, "We will secure supply stability through strategic partnerships with major partners and continue to pursue resource efficiency in order to minimize the risk of profit decline."

He added, "At this technological inflection point driven by AI, what matters most is leading the market direction while providing consumers with a better experience. We plan to expand sales of new models, focusing on our flagship lineup."

Regarding the MX Division's performance outlook for this year, he projected, "Sales are expected to see modest growth, and shipment volumes will remain at similar levels." This analysis suggests that, as the smartphone market has reached saturation, shipment volumes are unlikely to fluctuate significantly. However, he noted, "Given the rapidly changing industry environment, including recent shifts in memory semiconductor supply and demand, there is room for market forecast adjustments."

On the Galaxy S26 series, scheduled for release next month, he said, "It features fourth-generation AI experiences, a second-generation custom application processor (AP), and a new camera sensor, delivering powerful performance. Based on these features, we will innovate the user experience and expand sales."

In the fourth quarter of last year, Samsung Electronics’ MX Division shipped 60 million smartphones and 6 million tablets. The average selling price (ASP) of smartphones was $244 (about 350,000 won).

Meanwhile, the Galaxy S26 series, set to be unveiled next month, is likely to see a price increase compared to its predecessor due to the sharp rise in memory semiconductor prices. Industry sources expect the Galaxy S26 series to be priced 100,000 to 150,000 won higher than the previous model. Taemoon Roh, President and Head of DX Division at Samsung Electronics, also indicated a possible price hike earlier this month at CES 2026, the world's largest electronics and IT exhibition, stating, "Among various business conditions this year, we are particularly concerned about the cost of key components, especially memory prices. The increase in key component prices will, in some form, have an impact on the products we sell," signaling a potential price increase.